FBOP chief Michael Kelly to appear on Capitol Hill

Crain's) -- FBOP Corp. CEO Michael Kelly, whose banking empire was seized by federal regulators and sold to U.S. Bank in October, will testify Thursday before a congressional subcommittee.

The House Financial Services subcommittee on financial institutions, chaired by U.S. Rep. Luis Gutierrez, D-Chicago, is holding a hearing on the condition of community banks, using the failure of FBOP-owned Park National Bank of Chicago as a case study.

Mr. Kelly, notoriously publicity-shy when he owned Park and eight banks in California, Arizona and Texas, is confirmed to appear before the subcommittee, a committee source said.

Mr. Kelly's banks ran into trouble after he invested more than $800 million in preferred shares of Fannie Mae and Freddie Mac. When the federal government seized the two mortgage giants in fall 2008, that investment was rendered virtually worthless.

A billionaire on paper just a few year earlier by virtue of his unusual sole ownership of Oak Park-based FBOP, he was unable to raise capital to compensate for the resulting hit to the capital of his banks.

Federal banking regulators closed the banks and sold them to Minneapolis-based U.S. Bank despite the last-minute intervention of U.S. Reps. Bobby Rush and Danny Davis.